In a landmark development for the cryptocurrency market, BlackRock Inc’s iShares Bitcoin Trust has ascended to become the world’s largest Bitcoin fund, amassing nearly $20 billion in total assets since its US debut at the beginning of the year.
As of Tuesday, the exchange-traded fund (ETF) held $19.68 billion worth of Bitcoin, surpassing the $19.65 billion held by the Grayscale Bitcoin Trust, according to data compiled by Bloomberg. Fidelity Investments’ Bitcoin offering, with $11.1 billion in assets, now ranks third.
The iShares Bitcoin Trust, alongside Fidelity’s ETF, was among nine Bitcoin ETFs that launched on January 11, coinciding with the conversion of the decade-old Grayscale vehicle into an ETF. This event marked a significant moment for the crypto industry, making Bitcoin more accessible to investors and driving the cryptocurrency to a record high of $73,798 in March.
The iShares Bitcoin Trust has seen substantial inflows, attracting $16.5 billion since its inception, while the Grayscale fund experienced outflows of $17.7 billion during the same period. Analysts attribute Grayscale’s higher fees and the exit of arbitragers as key factors behind the outflows.
“The success of IBIT underscores investors’ preference to access Bitcoin through the convenience of the ETF vehicle in an institutional-grade product,” a BlackRock spokesperson commented. “We remain focused on education for investors and providing access to Bitcoin with convenience and transparency.”
Grayscale Investments LLC did not immediately respond to a request for comment outside regular US business hours. However, the firm plans to launch a similar fund with lower fees, as indicated in a March regulatory filing.
The Securities and Exchange Commission (SEC) reluctantly approved the first US spot-Bitcoin ETFs in January, following a 2023 court reversal in a case initiated by Grayscale. The Grayscale Bitcoin Trust, established in 2013, became well-known as the largest such vehicle. However, its shares often traded at substantial premiums or discounts to its net asset value, prompting Grayscale to push for an ETF conversion to ensure trading at par.
In a surprising move last week, the SEC indicated a shift towards allowing ETFs for Ether, the second-largest cryptocurrency by market value. Under the leadership of Chair Gary Gensler, the SEC remains cautious about the crypto industry, particularly in light of recent scandals.
The advent of Bitcoin ETFs has been celebrated as one of the most successful new ETF categories, with total assets reaching $58.5 billion to date. Nonetheless, critics argue that the inherent volatility of digital assets makes them unsuitable for widespread adoption, even within ETFs.
While some countries, including Singapore and China, restrict or prohibit investor access to cryptocurrencies, the US market shows varied interest. A spokesperson for Vanguard Group, one of the world’s largest asset managers, stated in January that the firm has no plans to offer any crypto-related products. In contrast, BlackRock continues to lead the way.
Bitcoin’s price has quadrupled since the start of last year, bolstered by the introduction of ETFs, marking a strong recovery from the bear market of 2022. As of 7:39 am Wednesday in New York, Bitcoin had fallen less than 1%, trading at $67,757.
